Aktia Pankki Oyj

Good morning everyone and welcome to Aktia's Q2 results briefing. My name is Oskar Taimitarha, I'm the head of investor relations at Aktia and I will be the moderator for this event. Earlier this morning we published our Q2 results. A very strong quarter for Aktia. Aktia's CEO Anssi Huhta and CFO Sakari Jarvela will soon walk us through the results. And as always, after the presentations, we're happy to answer your questions. If you're following us online, please write your questions in the comments field. And now, let's get down to business. Please welcome Anssi Huhta.

Thank you, Oscar, and welcome also on my behalf. My name is Anssi Huhta, CEO of Aktia. I'm delighted that so many of you have come here in person or online to take part in this event on this beautiful summer morning. Together with our CFO, Sakari Jarvela, I'm happy to go through the highlights and results of Aktia's second quarter. Akte delivered a strong second quarter and I'm generally proud of what we have achieved together. Comparable operating profit reached 33.7 million euros, up 67% year-on-year. This result reflects solid underlying business performance supported by impact of the new ECL model. All our businesses contributed. Net commission income increased by 7% to 32.5 million euros, driven by higher fund income. Net interest income turned upwards and reached 33.1 million euros, up 3% from the previous quarter. Life insurance delivered an excellent result, with the net income increased by 75% to 14.1 million euros. Credit losses decreased by 10 million euros, while 8.1 million euros came from the transition to new EZL model. The underlying development was also positive. Both individual and model-based credit losses declined. Our loan portfolio remained high quality. Asset under management reached a new record of 18.1 billion euros, supported by 376 million euros net subscriptions. So again, strong performance and support from the favorable market conditions. Our ENPS also reached all time high, plus 35. For me, this quarter is particularly meaningful. It shows that the choices we have made, the focus that we have created, and the work we have done together are delivering results. Strong performance, clear momentum, and a team I am very proud to lead. Compared with the previous quarters, the second quarter of 2026 was indeed exceptionally strong. Operationally the strongest ever. As I pointed out a moment ago, the difference is, to some extent, explained by the one-off effect of the model changes. The quarter would have been very strong even without these one-off effects. Our business areas are performing well and delivering results. As you know, we closely monitor trends in our assets under management and net sales of our investment products. We are now reporting the fifth consecutive quarter of positive net subscriptions. For the second quarter, net sales was 376 million euros. In fact, the entire first half of the year has been characterized by strong net sales, totaling over 600 million euros. Something which, unfortunately, was somewhat overshadowed by the market turbulence during the first quarter. Overall, asset management have increased by more than 2 billion euros in one year. The role of international sales is being strengthened through our focus on sales and new partners. Through our six partners, primarily in German-speaking Europe, but also, for example, in UK and Benelux countries, we are seeing increasing activity and new business coming in. Net sales in the second quarter exceeded 130 million euros, and we are continuing to strengthen our presence in these markets. Let's move on to our business areas and the implementation of our strategy. I suppose you have probably all seen this image before, but I'd like to use it to remind you of the change we have made in the way we understand, view and manage our business operations. Our business model has two distinct pillars. We have the capital light life and wealth business with a strong growth potential. And we have the stable but more capital intensive banking business. These two areas complement each other well. We see our capital light life and wealth as a clear growth engine in the future. Importantly, growth initiatives in the capital light business have a clear positive impact to our ROE. Over the past quarters, we have made tangible progress executing our strategy. The strongest momentum is clearly with the life and wealth. Where we have contributed our growth investment. We are seeing now a concrete proof that our strategic choices are delivering results. Asset and management have surpassed 18 billion euros, but the number itself is only part of the story. What matters is the quality of the growth. Our focus is not simply to gather more assets, but to grow in areas that create sustainable profitability and long-term shareholder value. This is the way we continue to prioritize high-value products, active wealth management and international institutional mandates. Not all assets are equal. Same mandates generate significantly stronger economics than others. And our ambition is profitable growth, not growth for its own sake. Within life and wealth, the development has been particularly encouraging. Investment-linked insurance continues to reach new record levels alongside increasing assets under management, demonstrating the strength of our integrated customer offering. Internationally, our strategy is working. Demand for our fixed income expertise is growing. International AUM and net inflows are rising. And we are now taking the next steps to strengthen our presence in Central Europe. At the same time, banking continues to provide a strong, profitable foundation that enables our growth investments. Our loan portfolio remains healthy, credit quality is solid and credit losses continue to develop favorably. Strong growth in leasing, higher purchase and factoring has successfully offset weaker mortgage loan activity, while our updated credit models have strengthened our quality of balance sheet. Perhaps most importantly, banking is much more than lending business. It's our largest customer platform and one of the strongest distribution channels for life and wealth. Together, these two engines create something that is increasingly unique in Nordic markets. Stable, highly profitable banking business, funding, scalable, capital light, wealth and life platform with significant long-term growth potential. Next, few words about Momentum. This program has done exactly what it was designed to do. It sharpened our strategic focus, accelerated execution, and embedded growth initiatives in our day-to-day business. We have therefore already moved beyond the project phase. Momentum is no longer a separate program, it's simply how we operate. We exceed our first year target by delivering a 13 million euros run rate improvement against 7 million euros targets, putting us well ahead of plan. As the program has now become business as usual, we will no longer report Momentum separately. More importantly, the results speak for themselves. Net commission income growth has reached our 5% target. And we remain firmly on track to exceed 20 billion euros asset under management by the end of 2027. Two sustainability points for Q2. Firstly, we will continue voluntary CSRD reporting. For Actia, this is about trust, transparency and comparability, even if the formal obligations change. Secondly, we have submitted our science-based climate targets SBTI validation. By 2030, we will target 33% reduction in scope 1 and scope 2 emissions. We also target 58% of relevant clients and investments having approved SPTI targets, up from 37% at the end of 2025. This supports credibility, international growth and long-term competitiveness. To sum up, our second quarter result was extremely strong. The net interest income trend turned upward. We reported strong net commission income and net income from life insurance. Our asset management reached an all-time high level. International sales developed well and we saw the first significant deals resulting from our new partnerships. We have a healthy loan book with good asset quality and low credit losses and all-time high ENPS. With that, I will now hand over to Sakari for the financial overview.

Good morning everyone and welcome. My name is Sakari Jarvela and I'm happy to present the financial result for the second quarter and the first half of 2026. As Anssi already said, we're extremely pleased to report excellent second quarter result with comparable operating profit of 43.7 million euros, one of the highest quarterly profits in Aktia's history. Starting from the net interest income, as we had indicated in previous quarters, the declining trend turned in the second quarter, as the reported NII grew 3% compared to the first quarter. Overall, we reported 33.1 million euros NII in the second quarter and 65.1 million in the first half, which is still below last year, but the quarterly trend is now increasing. Both the loan book and deposit stock decreased slightly during the quarter. Net commission income growth at 7% compared to the same period last year is one of the highlights of the quarter, something we are very proud of as it signals that we are delivering in one of the core parts of our strategy. In life insurance business we reported exceptionally high net income of 14.1 million euros in the quarter as the effects from shifting interest rate curve and overall market turmoil corrected from a very weak first quarter. Looking at the first half in total we reported net income from life insurance of 15.1 million which is 4% ahead of last year. The one large individual impact that contributed to the close to record comparable operating profit comes from the implementation of new expected credit loss model. This generated 8.1 million euro profit impact during the quarter in line with what we had already announced in April. Another one-off item worth paying attention to is the approximately 1 million gain we booked from reorganizing our liquidity portfolio shown in the other income line. On capital side, our CT1 ratio was 12% down 0.8% from the previous quarter. This decrease was due to the new IRB models being taken into use, again in line with what we had already announced before. In segment perspective, all our three business units grew top line in the quarter compared to last year, with solid quarters from both banking and asset management segments. So we're truly firing from all cylinders in our business. Then turning into life insurance, we spent a lot of time and effort in our Q1 call to explain why the weak result in Aktialiv was not something we were particularly concerned about. Now we are happy to be able to confirm this in actual numbers as the net income from life insurance in Q2 was at exceptional level. The largest part of this excellent result derives from the recovery in the with-profit portfolio from the very weak Q1, driven by correction in the valuations of both the investment portfolio assets and the discounted value of the liabilities. We can never rule out other similar periods of volatility during the rest of the year, but barring that, we could say that after H1 result, our with-profit portfolio is now back at a normalized level. The risk-life insurance business also had a solid quarter following a slightly weaker Q1. This is one of our core strategic focus areas, so we are obviously very happy to see that. The unit linked business also had another good quarter with AUM again reaching a new record level. So Q2 delivered a very strong recovery for our life insurance business, but not just that, but also a very strong underlying performance. The development of net commission income in the quarter was really, as I said, one of the highlights. In total, NCI grew by 7% year-on-year, and within this, the mutual funds and asset management were the driver, growing by over 9%. The strength of this result is further underlined by the fact that we have an ongoing restructuring project in our cards offering, which generated some transition costs weighing on the result. Our lending fees grew year on year, but also from the last quarter, although activity in the loan market in general is still not at the very high level. Net commission income growing by over 5% is one of our key financial targets and we are very, very happy to be on that trajectory. As mentioned earlier in Q2, we did witness the turn in the net interest income as the quarterly NII grew from the previous quarter, having declined for nine quarters in a row following the lower interest rates. Our loan book was stable in the quarter and deposit stock declined very slightly. This downward movement in deposits was, however, a result of certain larger corporate deposits converting into AUM. Household deposits, in turn, increased slightly. We expect the NII dynamic going forward to remain positive as the interest rate increase we have seen in 2026 will work its way through the interest income. As we have stated before, we do undertake standard hedging measures for the deposit side, which means that any market rate moves will come through with a lag, so the full effect of the higher rates will only be felt fully in next year. On the cost side, we had a rather uneventful quarter with planned moderate 3% increase in operating costs compared to last year. Our personal costs are very well in check considering the collective agreements for salary increase in the sector and also relative to our peers. IT costs are increasing as we continue to invest in data and AI capabilities and previous years higher capex shows in slightly increasing depreciation charge. As explained in detail in our Q1 presentation, during the quarter we had two important model implementations. First, we implemented our new IRB models in June, which affected both our risk-weighted assets and also our capital. The final impact from the new models to our CT1 capital ratio was slightly over 1%, in line with what we had guided in Q1. Secondly, we also implemented our new ECL model in June, which decreased the expected credit loss provisions by 8.1 million, again in line with the 7 to 10 million guidance we gave in Q1. This impact was recognized on our P&L, as already discussed. Looking at the credit loss provisions in more detail, we can see the impact of the new ECL model in declining impairment for loan book in all three stages of the impairment cycle. Disregarding the impact from the new model, it is important to note that our ECL provisions continue to be at the low level, highlighting the health of our balance sheet. Finally, just noting that the relatively large number in the quarter for realized losses which have already been written off and removed from the impairments primarily consists of a large case which was provisioned during 2025. CT1 ratio at the end of the quarter was 12%, down from 12.8% in the previous quarter, but well within the upper part of our target range of 2-4% above the regulatory minimum. As previously discussed, the new IRB models affected the ratio negatively by slightly over 1%, while minor restructuring of the holdings in our liquidity portfolio had a positive effect. According to our capital policy, we would like our capitalization to be at the level that is prudent but efficient. So even after the slight drop in the CT1, we are pleased where we are with our capitalization level right now. On funding side, we have no large needs in the near future after the successful refinancings earlier in the year. But we continue to monitor the senior preferred private placement market for any refinancing needs. Aktia Life Insurance has a Tier 2 instrument which it has applied to a permit to call with a plan to replace and refinance the note in due course. So we are following that market as well. Then moving on to the outlook for the rest of the year. Our guidance is that the comparable operating profit is expected to be approximately at the same level or slightly higher than the 106 million in 2025. We reported 62.4 million operating profit for the first half, which included relatively large positive one-off items, the new ECL model in particular. Our current expectation is that the underlying performance in the second half of the year should be roughly similar to the first. In giving our guidance, we recognize the volatile nature of our life insurance business, which at times may have a meaningful impact to our results if market conditions change, as we saw during the Q1 this year. Hence, at this point of the year, we are still reaffirming our guidance but are adding a further note that the result could be slightly higher than last year. Again, we will review our guidance throughout the year as more data becomes available. This completes our review for the second quarter results. So thank you for listening and we're now happy to take answers to your questions. So Q&A session will be moderated by Oscar. Thank you.

Thank you Anssi and Sakari and welcome back on stage. So now we're happy to answer your questions and I think we'll start with Antti Saari from OP here who is here on site. Antti.

Thank you. Firstly I would like to ask you about your premium banking clients. According to your comments and asset management development it's performing quite nicely but still your mortgage lending is declining and to me it seems that perhaps you're slightly losing market share in that. So how these come together?

That's a fact that our market share is a little bit dropping. But at the same time, we need to remember that Aktiha has sharpened the focus where we are aiming our resources and what kind of customers we would really like to have. And obviously, we have targeted to premium and private banking type of customers, and we have the clear focus. And that target group is... Slightly or relatively smaller than the whole society, so to speak. So we are aiming to that target group, and that has an effect to our mortgage lending.

Okay, so in your target area, the lending is growing.

In target area, it's growing. And especially in private banking, the growth has been extremely good. During the past, I don't know, four, five quarters, we are doing relatively good.

Okay, then second question, looking at your 29 targets that you published some time ago, when you published them, they seemed ridiculously high to me, but looking at your performance in asset management right now, they seem reasonable and perhaps achievable. How would you describe your net flow in asset management? Is it according to your targets or are you actually even running above your internal targets at the moment?

We are running according to our targets, so to speak. So we have this 20 billion euro target for a momentum program. And as you said, it's achievable at the moment. It looks like that. And we have been extremely successful, especially in the wealth management side. So according to our targets and it's achievable. So that's the case.

Then one more question. Asset management has been performing nicely, as mentioned, but what's your biggest area to improve in asset management at the moment? There must always be something to improve.

We are improving at the moment and the buses lead to our international sales. So it's moving in the right direction. We are achieving our goals at the moment. But obviously we have high expectations from international sales. So we are putting a lot of effort to that at the moment.

Okay, thanks. That's all from my side.

Maybe if I can just add one thing, not to dampen, but it's important to know that also in asset management we have taken some decisions of what we don't do. So there are certain areas, especially in the closed-end fund side, where we expect the AUM to decline from those parts and then we expect to replace from others. So to be sort of... Net sales at this slope in the growth is probably not going to happen, but the growth we expected to see and are still positive on reaching the targets, absolutely.

Thank you. And then we have a question from Thomas Kaita from Nordea regarding the AUM and NCI. So the question is, your AUM grew by 15%, but asset management net commissions only by 7%. What is the reason for this? Sakari, would you like to start?

Well, I think purely mathematically, if we sell, the whole income or the full year income has not really come from the net sales, let's say during this year, but only half. So if you sort of have the growth of AUM, then you probably are at the right ballpark and then we are growing probably even a little bit faster than in a way the NCI would tell.

Yeah, but that's the case.

Thank you. And then moving to SVB and Jakko Tyyraväinen. The Finnish house prices continue to slide. Have you seen any signs of mortgage volumes turning to growth, Anssi?

We have seen the turn, especially in the private banking and premium banking customers. The wealthier customers are taking mortgages at the moment, but it's a small turn. And the number of credit applications is growing at the moment. It doesn't really show in the lending figures yet. So let's see if there is a real turn in the market, but the future will tell that.

Thank you. And continuing with SVB equity research, first question. First, a question on your model changes. Are all known model-related CET1 effects from the IRB model now fully phased in, or are there further add-ons or validation-related capital requirements still in the pipeline beyond Q2? And likewise with the ECL model change, can we expect any additional effects, or is it the model change effect limit to this quarter? Sakari.

Yes, they are limited this quarter. So for all intents and purposes, they are now done, implemented. We don't expect any on capital side or on the P&L side.

Yes, and this concerns both the model change. Exactly. And the second question. Second, you guide for a slight improvement in NII. Are you expecting deposits to be the main positive contributor to the improving NII outlook? And in this guidance, do you factor in the market outlook for deposits as its price in an additional hike this year, or are you only applying your guidance on the known rate hike in June?

It's probably the latter. So when we guide positive, it is in a way driven by the higher rates we've seen this year. Of course, like Anssi mentioned, we see some green shoots in sort of mortgage applications increasing. We also can read other banks operating in the market saying the same. Maybe it makes us a little bit more positive on the volumes, let's say in the medium term. But it's primarily the higher rates now coming through towards the end of the year.

And especially in the corporate banking side, we have been able to compensate the net interest income from the higher purchase and leasing factoring higher purchase products. So that has had a positive effect to our net interest income during the first half of the year.

On the deposit side of the question, I mean, it's notoriously difficult to try to forecast deposits. I mean, typically for the sticky household current account deposits, they grow as our clients get wealthier and as we get more clients. So I think in reality for that growth to really start taking place, we need to start increasing our number of customers. But at the same time, We don't see a massive deposit competition on the market right now, so I think we're well placed to go with the market, I would say.

Okay, thank you. And then continuing with SEB, Jaakko Tyrväinen has the next question. And perhaps I think it would be good to a little bit broader elaborate regarding international sales and next steps. But the question is, what are the key products that drive the international AUM growth?

basically our fixed income side and the products what we have on that side so that's the case and we mentioned the markets so it's a German-speaking market and Benelux countries and also UK but mainly the German-speaking countries and especially Germany is in our target at the moment so and EMD emerging market debt products so that's one of our spearheads at the moment. and is there anything about our next steps and plans that we would like to... As we mentioned that we are putting a lot of effort and we are recruiting people here in Helsinki and obviously we need German-speaking client executives and so forth so we are putting effort to do this growth potential what we see and now it's like a Moving in the right direction and let's see in the near future where we end up.

Okay, thank you. Do we have more questions here on site? And as we have no more questions online, then perhaps if there's nothing you would like to elaborate here now, then...

There is one thing regarding your question, Antti Saari, from here. As I mentioned before, there is AUM and then there is AUM. So there is a huge difference between the earnings with the different kind of AUM classes. And obviously we are aiming to that target that we get the most profit, which is more profitable to Aktia. And the AUM itself, it's not our target. The profit and the profitability is the target where we are putting a lot of effort. So that 18.1 billion euros, it's a nice figure, obviously, and we are super happy about that. But at the same time, the most important thing is the net commission income, what we get from that. So it depends what kind of AUM you get.

Thank you very much. Many thanks to all of you, both those here on site and those who followed us online. We wish you all a pleasant end to the summer and we hope we all can enjoy a bit more sunshine. Thank you, goodbye and see you again.